Win/loss statements in the negative

[MargaretL · Accepted solution]

I'm not sure what you refer to as "negative", but here is data entry for the gambling winning and losses. 

1. Federal taxes
2. Wages and Income
3. Scroll down to Less Common Income
4. Select Gambling Winnings - please follow the prompts. You will be asked if you received form W-2G as that's how winnings are usually reported. But - if you have not received the form- select Skip; the program will ask about winnings not reported on Form W-2G- then it will ask you to enter 

Notes:

• you can only deduct gambling losses up to the amount of your gambling winnings. If you won thousands, the same amount can be deducted as your losses.  If you happen to have a bad year and have no winnings - you cannot report any losses without the winnings. Per IRS, you need to first owe tax on winnings before a loss deduction is available. 
•  it is very common that your refund will not change after your losses are entered. Why? Because the IRS does not permit you to simply subtract your losses from your winnings and report your net profit or loss. First, you may deduct gambling losses (that's why we ask you enter the amount) but it is only deductible to the extent of your winnings. Secondly, the deduction for your losses is only available if you are eligible to itemize your deductions (have mortgage interest, real estate taxes, medical, charitable deductions, etc.) If you claim the standard deduction, (because you don't have enough expenses to itemize) then you can't reduce your tax by your gambling losses and therefore will not see your refund change at all.